Commenting on Ezra Klein’s post about Charles Murray’s book In Our Hands is well past its timeliness, but I enjoyed this bit:
I do, however, want to use my blog’s blissfully unlimited space to go into some added detail on Murray’s policy mistakes. The base assumption of his plan is that he can halt the growth of health spending — the primary driver of budgetary inflation — by restoring all power to the individual, who will then bargain with private insurers and demand better care, lower cost, and snappier service. His basic premise is that given the trillions floating around our government, the concept that we have any problems at all is absurd, and it must mean that government waste is subverting America’s abundance.
The problem is, our country’s entitlement programs are models of bureaucratic efficiency. Social Security spends less than one percent of its budget on administration; for Medicare, it’s two percent. Compare that to the private health insurers, who blow about 14 percent on administration. Indeed, if you imposed the Plan immediately, it would cost staggering $355 billion more than the government currently spends. Some efficiency.
Perhaps Mr. Klein’s summary of Mr. Murray’s plan is correct; I haven’t read the book, so I can’t comment on the details. Its details aren’t essential to understand that Mr. Murray is probably not talking about overhead. It doesn’t matter how efficient the bureaucracy is at administering entitlements, if it’s paying too much for unnecessary procedures, there is waste that should eliminated. If the public wants its unnecessary procedures, they should pay for those procedures themselves. So, if you spend 14% on overhead to keep prices in line, you may be able to save more than if you efficiently overpay.
Link from a Balloon Juice discussion on minimum wage proposals.